Human-Life Approach

The human-life approach sounds nice...but it’s not.

The human-life approach asks, "how much life insurance will this family need if the person who's insured with life insurance dies today?" as a way to calculate the amount of life insurance coverage that would be needed if the insured died (more like human-death approach).

Here’s how it works: take the insured’s assumed lifetime earnings ("assumed" if they don’t die until after retirement), minus taxes, minus living expenses of the insured only, over the time of which earnings will need to be covered in case of the insured’s death, all discounted.

The “time” part will differ depending on the life insurance policy. For instance, if it’s to cover someone when their spouse dies, maybe the idea is to have the life insurance cover income until retirement. Or if the insurance is meant to cover kids if the parents die, then maybe until those kids are 18, or graduate college.

All right...sounds like a pretty humane approach after all.